Scavenging for Survival

Dear Fellow Members:

This editorial comes from Bekasi, an industrial city in a Less Developed Country (LDC), Indonesia. It’s a bit ironic that Indonesia is called ‘less developed’ because the country’s culture, although under heavy assault from western-style popular entertainment, is a lot richer than that in many “first world” countries. However, in the infrastructure and services area – in this case solid waste management – the editorial shows how the city is firmly in the LDC category. It also shows how a rescue might be at hand from a wealthy European country. The editorial also questions some of the motives behind the ‘rescue’ and leaves it up to the reader to decide whether the advantages of the scheme outweigh its mercenary qualities.

First, some background. At present only 30% of Bekasi’s solid waste is picked up by the city administration. It is delivered to the city’s landfill at Sumur Batu. Organic material constitutes about 75% of the incoming load and that remains at the landfill where it composts down into potentially useful soil amendments.

What happens to the other 70% that isn’t collected? That’s where scavenging comes in. They comb the streets, mainly men, looking for PET and HDPE, cans, glass bottles and paper and cardboard and stuff them into a large sack on their back. Then the scavenger takes his ‘load’ to a consolidator where he is paid for the recycled ‘loot’. But there’s another breed of scavengers, too. They inhabit the landfill, literally (permanent and semi-permanent) as you can see from the two photos. As new loads of solid waste are delivered, it is met by an army of scavengers who remove recyclable and saleable items.

There are several issues here. One is that the scavengers frequently work in a high-risk environment within the radius of the swinging arm of an excavator. Another is the total lack of concern for health and hygiene in highly unsanitary working surroundings. Neither the scavengers care nor the city administration. Photo 1, for example, shows a small food and drink stall with a blue awning perched on the garbage amongst flies, rats, stench and disease. Photo 2 shows several blue roofed wahrung in the same landfill ‘cell’. A third and crucial issue is the methane which is being emitted at high rates from the decomposing organic material in the landfill. Methane is a greenhouse gas, 20 times more potent than CO2. It simply escapes into the atmosphere as it does at thousands of landfills in Indonesia (and other countries, too). And that brings me to the Clean Development Mechanism (CDM).

Photo 1: Excavator, swarms of people scavenging as new material is revealed and the wahrung or food and drink stall on the landfill itself.

CDM is a scheme jointly run by the World Bank and countries that signed AND ratified the Kyoto Protocol. The scheme allows high (per capita) CO2e

[1] emitters in wealthy Europe, Canada and Japan to gain carbon credits by implementing projects that perceptibly reduce GHG emissions. The World Bank acts as the Trustee for the money that the wealthy countries contribute to projects in order to buy emission credits, so allowing them to meet their Kyoto pledges. The credits are bought from Indonesia in this example but there are many projects throughout SE Asia and China. Almost all of the projects are in LDCs. In addition, a few individual, generally large companies in non-ratifying countries have joint venture arrangements with agribusinesses in SE Asia to conduct CDM projects.

So the CDM mechanism is a wholly COMMERCIAL approach to combating global climate change. The localized environment is likely to improve as a result of a CDM and social conditions in and around a project site, too. The commercial aspects are that:

• CDM projects use CO2e as a tradable commodity;
• Certificates are issued called Certified Emissions Reductions or CERs;
• The current market price for Asian certificates of CO2e is about €7/ tonne. Price per tonne of CO2e depends on “project risk” – high risk earns more and vice versa, as well as supply and demand;
• Most CDM projects only go ahead because of the flow of CER money to the investor(s). A high rate of return is needed to compensate for what is seen as an unusual and/or high risk
  

CERs are only awarded after the project is approved by the World Bank. Approval and validation is quite rigorous and is succeeded by strict monitoring and careful verification. In addition, full environmental and social impact statements and community consultation efforts are required for CDM projects.

Photo 2: Several warhung, and a scavenger with a bamboo basket for his ‘loot’.

What does all this mean for the City of Bekasi? The city administration recently signed agreements with a European donor, the World Bank as trustee and a private business in Jakarta to cap the landfill, initially flare the methane and gain revenue from the carbon credits. Three private companies will submit proposals to construct and manage the project. They will provide all the front-end investment costs. The City of Bekasi will receive about 15-17% of the CER income. The revenue stream for Bekasi will be a sizeable addition to its budget – about US$60,000 per year diverted from the CER flow to the private company. Potholes on some arterial roads are so bad they cause traffic jams and increased pollution. They’ll be repaired.

The new tradable commodity – methane – means that garbage management will improve dramatically as well: Part of the revenue going to the City of Bekasi from the private company must be diverted to solid waste management. And of course it is in the City’s interests to get as much garbage into the landfill for recycling and decomposition as possible. It is even more in the interests of the private business to do the same. And a little of the city’s share of the CER income must be diverted to improve health and safety conditions for the scavengers in a (slightly) more formal recycling operation, at least for those who work at the landfill. The street scavengers will not find much material in the future and will lose their livelihood. On the other hand, there will be more jobs in safer and healthier conditions at the landfill so there may be balance in that direction.

So are there any downsides to what looks like a win/win situation? Maybe not but firstly, it is interesting that the wealthy countries cannot achieve their Kyoto targets within their own countries. This is probably for socio-political reasons. They have to rely on obtaining reductions by picking the easier, “low hanging fruit” in less developed countries. My cynical side says desperately defend your footprint and don’t rock the boat by improving conditions in other countries! Second, private companies will not get involved in GHG reduction, even if the raw materials ie GHGs come from their own processes, unless the internal rate of return is 20 – 25% or more. Altruism is meaningless. And so is environmental responsibility to a large degree. If the rate of return slips below that threshold, the project is unlikely to be done under current circumstances. That tends to look mercenary.

Having said that, the cost of up-front infrastructure is certainly high. For the small Pontianak landfill (in Kalimantan, Indonesia) the cost of the methane flare alone (including transportation from Jakarta) was US$390,000. The total cost of preparation, capping and trapping was more than double that amount. No city government in Indonesia can afford that kind of investment unless it can obtain up-front money from the trustee and that is only likely to happen for a very low risk project. So the consultants who manage the project processes and do the impact assessments benefit from CDM. But it is the private sector that has become the main beneficiary of CERs. They’ve seen the potential of a new international business opportunity and are exploiting it vigorously. In the Pontianak example 17% of CER revenues are diverted by the company to improving the city’s waste management (another slightly sceptical exclamation mark there) and to improving conditions for scavengers and their children at the landfill. Does this satisfy the requirements of corporate social responsibility or is it merely commercial opportunism? Or is it a mixture of both? I’m eager to know what you think.


John Blair
Indonesia,
Architects for Peace, August 2007

[1] CO2equiv simply means a GHG measured in CO2 terms. Thus methane (CH4) is 21 times more potent than CO2 and therefore gains 21 times the CERs that CO2 does.